Bob Sharron

How Does the Financial Crisis Affect the Peak Oil Thesis?

David,

Good analysis of the current oil situation. I agree that in the long term, oil will not stay at current lows. Having said that, in your view, what is the time span of the turbulence you are referring to in your article.?

I am also long in PWE and intend to stay long there and collect the dividends. However, I am not sure that PWE or other CANROY's will be able to maintain current levels of payouts per unit trust.

CANROYs Remain Attractive as Oil-Related Investments

It appears that Jack is correct when he says that Irrationality prevails but ultimately the facts will speak loudly. I don't have any issue with his analysis. Sure, he placed himself out there to criticism for making statements about where he felt the unit trust value of PWE SHOULD be. The fact that it is not isn't an issue because ultimately it will get there. I personally own a signficiant number of units ($600k invested at an cost that puts me underwater presently.) But I can sleep at night because I know that I will be getting by roughtly 5k a month after taxes and also I will realize a GAIN on the value of the trusts by at least 20% over the next year to year and a half. If it takes longer - so what. At least it beat losing money in a bear market. (which most investors do- no matter what they may admit to themselves or others.)

So Jack, way to go. I am with you on this one. Patience is a virtue. A quick return is never a prudent way to gain true wealth.

Bob

Canadian Oil Sands, Penn West Energy Protected on the Downside

Management stated that the payout ratio is 61%! Not under 50% as we would have expected. So that is further evidence that they have not performed as wel as expected. Share price is falling and in my opinion will continue to fall to about 24.00 per unit.

Canadian Oil Sands, Penn West Energy Protected on the Downside

One more item as to hedging strategy -PWE management is EXTREMELY conservative and the hedging price going forward is around $68-$76 - Not anywhere near what one would have thought. (perhaps 120??? So 40% or more of the revenue is LOST by the hedging strategy. In fact, management stated in the call that they were tempted to hedge the entire production when the price of oil started to climb but the Board maintained its position that around 60% remain open to spot market pricing. Not at all what Jack had expected.

Canadian Oil Sands, Penn West Energy Protected on the Downside

I attended the live conference call this morning. Basically Management is saying that they feel their hedging strategy is sound and that they will continue the .34 distribtion per unit trust throughout the rest of the year. They stated that they MAY increase distribution to unit holders in 09 but they may also use it for capital expenditures. As to the market price, they feel that a 30
% discount to relative book value is what most Oil & Gas companies trade at in the Market. That said looks like a $26-28 price point is in the cards for quite a while.

This is a strong company and we can expect distributions to stay where they are now without much risk. I feel badly for those of you (including myself) who bought at highter prices expecting the double gain of a unit price increase along with a great distribution payout.

Now is a great time to buy if your a dividend investor. As for the rest of the longs under water. Hold your breath - eventually the loss will be recovered but it will take a few years!

Chinese Solar Stocks Present Compelling Value

What is happening with PWE? Instead of North of 40 it is now South of 30 and declining. There is no rationality to the price or the volatility of this stock. Anyone have a hypothesis on current performance?


On Jul 16 03:45 AM Jack Yetiv wrote:

> P.S. Disclosure. I hold large long positions in TSL, SOL and PWE
> (a Candian Royalty trust). I am not short anything.
>
> Jack

Stocks to Buy Before the Oil Bubble Bursts

Jack,

Given your analysis that PWE will continue to enjoy a huge upside in profitability into 2009, even if oil does pull back to the 120's - Are you still confident that the trust unit price will move north of 40? I am specifically concerned about the context of the market being negative or strongly bearish. My only concern about the upside price for PWE is that it is possible (perhaps not entirely probable) that a strong financial report gets ignored by investors who are pulling money out of oil in general.

Penn West Energy Trust: My $50 Price Target

Jack,

Thanks for the reply. I am staying the course with PWE.

In an earlier post, you were strong on HTE. Have you revised your position on investing in Harvest?

Also BPT is small but is considered to be significantly undervalued at its current price. The Street.com rates it as a BUY with an A rating. Have you looked at this Trust? What are your thoughts on a US grantor trust (besides the taxation issue)?

Bob

Penn West Energy Trust: My $50 Price Target

Jack,

Like yourself, I have been loading up on PWE and bought another 114,000 units at 24.60 believing like you that this will be a $50 equity by the end of 2008.

My question pertains to the unit price decline nearing the dividend date. What is your (or other members of this board) view on the relationship between dividend date and unit price. Is this a typical dip or does it have more to do with the recent volatility in oil prices?

Is there a 52 week high barrier that we are dealing with as well?

I'd be interested in your thoughts.

Bob